Officials Approve CNX Game Land Lease
Washington PA Observer-Reporter
27 January 2010
The Pennsylvania Board of Game Commissioners Tuesday approved an oil
and gas lease with CNX Gas Co. to acquire oil and gas ownership under a
portion of State Game Land No. 179 in Greene County.
The lease contains about 2,175 acres in Aleppo, Jackson and Gilmore
townships.
CNX Gas currently owns oil, gas and coal rights on portions of State
Game Land No. 179, and also controls oil/gas lease position on private
lands adjacent to the state game lands.
In exchange for an oil/gas lease, CNX Gas will convey to the commission
a 2,300-acre tract of land known as the Jacksonville property in Young
Township, Indiana County.
Upon transfer of this tract of land, the commission will establish a
new state game lands complex, State Game Land No. 332. The land has
been assessed a value of $1,666,500.
According to the commission, it has negotiated with CNX in an effort to
safeguard the development of its oil/gas reserve while protecting the
wildlife resources and recreational use of game lands in the county.
The commission has agreed to a seven-year lease with a three-year
"drill or drop" clause. CNX also has agreed to pay rental for
undeveloped acreage in years four through seven. The commission and CNX
Gas have agreed to a tiered royalty ranging from 16 percent to 21
percent, based on the well-head price per 1,000 cubic feet of gas
produced and sold from each well.
CNX also will pay the commission a well location or spud fee of $5,000
for each shallow well and $10,000 for each well targeting the Marcellus
or deeper formations.
In addition to a surface well or wells, CNX also wants to use surface
pipes to transport oil and gas off the state game lands.
Further, CNX will provide 350,000 cubic feet of free gas annually for
the agency's use with a payback clause for nonuse.
Oil/gas development will be regulated by the Commonwealth's oil and gas
regulations and the agency's standard oil/gas lease agreement and
$25,000 performance bond. The lease will include the commission's
standard wildlife and protection measures.